L.A. ad agencies head for the Hollywood hills

Dentsu's Colby Effler & Partners, Santa Monica, Calif., is forming a new entertainment division with the help of Stefan Gerber, founder of broadcast advertising/promotion shop Air Creative, Los Angeles. The unit's first client is the $10 million Paramount domestic TV business, formerly at Air Creative.

With the move, Colby Effler becomes the second ad agency in recent months to join the entertainment marketing business. In December, Dailey & Associates, West Hollywood, acquired movie-trailer maker Kaleidoscope Films and film poster specialist Graphic Orb. That duo rounds out earlier entertainment forays by parent Interpublic Group of Cos., including its purchase last year of PMK, a Tinseltown PR shop handling a star-studded roster, and its 1997 acquisition of talent agency Addis-Wechsler & Associates, now called Industry Entertainment.

Both lucre and glamor are attracting agencies to entertainment marketing, a 24-hour-a-day world producing posters, standees -- stand-up posters found in movie theaters -- and TV spots.

ANOTHER BUSINESS

"It allows me to be in another business I would not normally be in," said Dailey Chairman-CEO Cliff Einstein. "It brings in a different kind of income and adds the equivalent of the revenues of a large agency."

In fact, its two newest acquisitions aided Dailey in quietly winning the $10 million Legoland account from Asher & Partners, Los Angeles, last week.

Search consultant Mike Agate, chairman of Select Resources International, said the entertainment businesses are very profitable.

"If you've ever been to one of these shops, every other car in the parking lot is a Ferrari," he said. "If you're in L.A., it's not a bad business to be in."

It's also a quite different one. Entertainment ad shops measure size in terms of income from projects -- estimated at a total of $200 million per year -- rather than on media billings. Moreover, the shops have no agency of record status and often simultaneously work for competing films.

Dailey's Mr. Einstein said the match is logical because it gives agencies a foot in the door of the area's largest industry.

A NATURAL FIT

"If you are in the middle of the movie and broadcast industry, how can [one] not be part of this?" he asked.

The focus on movie trailers, another form of advertising, also offers creatives expertise in related fields such as movie editing. "These are creative resources," he said, noting the industry employs some of the world's best film editors. "Why not own some of it?"

Increased competition from new companies has forced some veteran entertainment ad shops to sell or merge, or take on other entertainment business, according to entertainment marketing executives.

"The competition among trailer houses is the heaviest it's ever been," said Craig Murray, president of Craig Murray Productions, Burbank, which does work on movie trailers and TV spots for Walt Disney Co.'s animated movies.

"There are a lot of people who can buy an Avid [editing system], put it in their kitchen. It's not like 10 years ago -- you can acquire the technology cheaply."

But with more competition, fees have also come down.

Some predict this spells increased gyrations in the industry.

`THE YEAR OF CONSOLIDATION'

"This year will be the year of consolidation in the entertainment sector," said Scott Friedland, president of Friedland Jacobs Communications, a Burbank TV and Internet agency shop. Mr. Friedland said Los Angeles entertainment agencies are being pushed to increase market share and revenues.

"It's a monster that needs to be fed," he said.

"The entertainment business is the fastest-changing of any industry," said Lee Hunt, now head of broadband solutions for the newly named LHA/ Razorfish, a New York Internet agency that bought Lee Hunt Associates, a strategic branding agency that has worked for both the Public Broadcasting Service and NBC.

"Razorfish was looking to get into television, and our clients were demanding more."

But some agencies in the hunt for Hollywood fame may find it fickle. In 1989, Seiniger Group, perhaps the biggest Los Angeles-based theatrical creative shop, was sold to WPP Group. Only four years later, principal Tony Seiniger bought it back.